Upselling: the shortest way to increase your accommodation revenue
Do you want to increase your accommodation revenue right away, but don't know how to do it? The solution is called upselling, and in this article you'll learn what it consists of.
In this article we discuss upselling, a simple and effective sales technique that can immediately increase your hospitality business's revenues.
One of the ways to improve your business' bottom line without having to find new customers or do revenue management on room rates is to upsell more effectively to the customers you already have.
Upselling does exactly that, and in the next few lines you will find out what it is, why it is important, when to put it into practice, and some practical techniques for doing it successfully.
What is upselling
Upselling is the activity of selling a product or service in a higher category and price than the customer originally purchased.
Let us explain: upselling occurs when you sell the superior room to the customer who bought the standard room or you sell the superior wine to the customer who ordered the house wine.
Basically, upselling is an upgrade for a fee.
Why is upselling important?
Upselling should be an integral part of every hospitality establishment's sales strategy for two basic reasons:
- it increases revenue
- it improves the customer's perception of quality
1 - It increases revenue
When you upsell, you are selling to a customer who is already buying something from you.
Consequently, the most difficult hurdle, that is, convincing the customer to buy, has already been overcome, and the guest is already well-disposed to purchase from you.
You only need to push them to go one step further and buy the superior product/service.
All of us are so inclined to upsell that we don't even notice when we accept it.
Think of all the times at the checkout counter of a McDonald's when the attendant asked you "do you want big fries for only 99 cents?" and you answered yes almost unthinkingly (as if it was obvious you want big fries, that’s a given).
Or when you used the super foam at the self-service car wash. Or picked up the 4 kg pack of coffee at the supermarket because the last kg was 25% off.
For this reason, applying upselling techniques naturally leads to an increase in accommodation turnover.
2 - It improves the customer's perception of quality
Let's put ourselves in the customer's shoes for a moment. We have just decided to book a stay for our trip.
However, this choice is often based on partial information because we try to evaluate so many possible options, from different sites and portals, without being able to keep in mind all the features of each one.
Then the hotel where we have booked informs us that there are additional choices.
At this point two factors intervene that, for customers, create the perception of higher quality for us: anchoring and personalization.
Anchoring occurs when the mind attaches itself to a certain price, product or service and uses it as a basis for calculation. Consequently, a different price, product or service will not be evaluated in absolute terms but in comparison to the anchor.
In practice, we no longer perceive the superior room at a price of €160 per night but as only €20 more per night than the initial anchor price. The most expensive bottle of wine is no longer €25, but only €8 more than what we originally intended to have.
Moreover, since we have already made the most mentally complicated and exhausting choice, that of the hotel in which to sleep, we will see these additional options as an opportunity to personalize our stay according to what really interests us.
In this way, by increasing the personalization of the product with upselling, the perception will be of a product/service of high quality and value.
When is the best time to upsell?
There are specific moments of contact between you and the guest when it pays to upsell. At these times, the guest will be more likely to make a purchase because they can focus their mind on the offer without other distractions.
In the pre-stay email, after you have provided them with all the information about their arrival, you can include a specific upsell offer that they can accept by simply clicking a button or replying to the email.
In this communication, it is critical to provide the guest with only essential information relevant to their arrival at the facility. Avoid generic information about other hotel services, overly lengthy pleasantries, and unnecessary local news.
Also avoid making these mistakes in your upselling offer.
- Too many choices: make a maximum of three additional sales proposals. More are excessive and risk confusing the customer.
- No personalization: proposals should be aligned with what the customer has already purchased. If they booked a superior you will directly offer them a suite upsell without writing "if you booked a standard we offer you the superior for only...." Personalized communication always gives better results than a generic one.
- Lack of availability: if you offer them something, make sure it is available. There is no such thing as "based on availability" in upselling. If you propose it, you must have it, otherwise don't offer it.
- Complicated calculations: the guest needs to know right away how much it will cost them to accept the offer. They should not get into calculating price differences between room categories or how many euros the percentage discount corresponds to.
Check-in is an ideal time to upsell: for the guest, it is a phase of relaxation and excitement because the vacation is beginning.
Even if the vacation starts earlier, until check-in there is a struggle (suitcases, organizing the trip, airport, transfer...).
But now the client has finally arrived. Relaxation is right there in front of them. So it is the ideal time to offer them something better, at an acceptable price.
The important thing is to make it clear how much better the new offer is. Too often communication is limited to the name of the room category ("would you like to stay in superior for only €20 more?") so the answer is very often negative. Instead, it is necessary to sell the upgrade: "would you like to stay in one of our superior rooms? They are larger and have a sea-view balcony compared to the standard you purchased. It would be only €20 more per day."
The guest's first login to the hotel's Wi-Fi is a moment that can be used to propose special offers and upsell promotions.
Here it is important to focus on the customer's attention: at this specific instant it is aimed at Internet access, and they will want to connect as quickly as possible. Consequently, you have a few seconds to capture their attention.
Do it with a quick message without too many frills. "Superior room only +€20 compared to standard. More info at the front desk." This way, it only takes a glance to read the offer and catch their attention.
How to propose an upsell offer
In upselling, some winning sales strategies have emerged over time that maximize the likelihood that the customer will accept and thus optimize revenue.
Let's look at the main ones.
The sandwich strategy is implemented by offering the customer three alternatives.
A basic alternative, usually low in price but also low in value. A slightly superior alternative with several pluses and benefits and a slightly higher price than the base. And a high-end alternative with many advantages but also very expensive.
The intention is to sell the intermediate proposal with high quality but an acceptable price.
Example: propose the room already purchased by the guest as a base, as intermediate level the superior at €20 more per day and the suite at €60 more per day.
FOMO stands for Fear Of Missing Out. It is based on the fear that people have of not being able to enjoy something because they arrived late or because it has already been sold to someone else.
All promotions based on scarcity are based on this fear, such as those that have a specific time to be purchased ("offer available only in the next 24 hours) or a maximum quantity available ("offer valid only for the first 100").
Example: "The offer of the superior at this price will automatically expire in 48 hours" or "for the period of your stay, there are only 2 superiors left available."
Human beings are social animals. If other people buy a certain product or service, it becomes more attractive in our eyes.
Social confirmation is what makes people's reviews so important.
Example: in the upsell email, we might include reviews that comment favourably on the superior room or even on the upgrade from standard to superior.
Focus on differences
When upselling, it is important to use the anchor principle we mentioned earlier to your advantage.
The guest having already made the purchase has anchored themselves to the product and price they have already purchased and uses this as a basis for calculation. It is therefore crucial to focus their attention on the differences between what they have purchased and the new proposal.
Example: do not sell by communicating the full price of the superior but the differential from the standard ("only €20 more per day"), do not communicate all the features of the superior but only the differentiating ones ("larger room", "balcony with sea view").
Offer a gift/extra
When upselling, you can try to add a small gift or extra to further entice the guest to accept the offer. This is the principle Amazon applies when it offers free delivery upon reaching a certain amount purchased.
Example: if the customer accepts the upsell, we can also offer them a welcome cocktail or free minibar, or ease their booking obligations (lower deposit, more favorable cancellation policy).
Do you want to discover the true potential of upselling and see how much more you could earn if you started implementing it now?
We have created a simple calculator in Excel that can reveal your potential monthly earnings from upselling.